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NZGBS: Richer, Closed On Strong Note, Neutral OCR About 3.9% (RBNZ)

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NZGBs closed on a strong note, with benchmark yields 7bps lower. While the local market opened stronger on the back of US tsys’ positive close on Friday, weak domestic data aided today’s strong close.

  • As previously noted, the NZ Performance of Services Index fell to 47.5 in March from a revised 52.6 in February.
  • Indeed, the local market strengthening through the session countered the ~2bps cheapening in US tsys during today’s Asia-Pac session.
  • (Bloomberg) The RBNZ commented on neutral interest rates in an article on Monday. “Due to New Zealanders’ high inflation expectations, the OCR would currently need to be about 3.9% to neither tap the brakes nor push on the accelerator of the economy”. The OCR is 5.5% “which is therefore clearly contractionary”. (See link)
  • Swap rates closed 5-6bps lower, with implied swap spreads wider.
  • RBNZ dated OIS pricing closed flat to 2bps softer across meetings. A cumulative 39bps of easing is priced by year-end.
  • The local calendar sees NZ REINZ House Sales tomorrow, ahead of Q1 CPI on Wednesday.
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NZGBs closed on a strong note, with benchmark yields 7bps lower. While the local market opened stronger on the back of US tsys’ positive close on Friday, weak domestic data aided today’s strong close.

  • As previously noted, the NZ Performance of Services Index fell to 47.5 in March from a revised 52.6 in February.
  • Indeed, the local market strengthening through the session countered the ~2bps cheapening in US tsys during today’s Asia-Pac session.
  • (Bloomberg) The RBNZ commented on neutral interest rates in an article on Monday. “Due to New Zealanders’ high inflation expectations, the OCR would currently need to be about 3.9% to neither tap the brakes nor push on the accelerator of the economy”. The OCR is 5.5% “which is therefore clearly contractionary”. (See link)
  • Swap rates closed 5-6bps lower, with implied swap spreads wider.
  • RBNZ dated OIS pricing closed flat to 2bps softer across meetings. A cumulative 39bps of easing is priced by year-end.
  • The local calendar sees NZ REINZ House Sales tomorrow, ahead of Q1 CPI on Wednesday.